A banking regulator should have veto power over branch closures, otherwise country communities will continue to pay the price of losing essential services, a long-running inquiry has found.
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The Senate inquiry into branch closures across rural Australia released its final report on Friday afternoon, making eight recommendations to protect the future of regional banking.
The committee spent a year travelling across rural Australia hearing about the effects on everyday life and business when a country bank shuts its doors.
Remote business owners gave evidence of having to stuff six weeks of cash takings into suitcases to fly to a city branch, or drive hundreds of kilometres to do their banking.
Farmers have lost local bank managers with expert knowledge of agribusiness, while elderly people cannot easily access cash and fear being scammed.
Several community groups said cash floats were hard to come by for events such as fairs, sport games and fundraisers, the social fabric of life in the bush.
The closure of a Westpac branch in Tennant Creek in 2022 was held up as a particularly egregious example, after the Northern Territory community was given limited notice.
Local charities were swamped by residents, including many Indigenous elders, who could not get cash and were suddenly expected to use digital services.
"The committee has been struck by the depth of community concern, the feelings of disappointment and anger, and the consistency of the messages from regional Australia -- people feel abandoned and disrespected by the banks," the inquiry's report said.
Among its key recommendations were that the federal government urgently develop a mandatory code of conduct requiring meaningful community consultation.
It recommended a regulator be authorised to approve or defer any closure requests and have the power to penalise banks who do not comply.
Many witnesses told the inquiry they supported the concept of a public bank, possibly using the Australia Post network.
The committee recommended the government set up an expert panel to investigate the feasibility of that idea.
The government should also set up a program that underwrites community banks, which are established by locals' investment, the committee said.
Such a program could be supported by an extra levy paid by the banks.
"It is clear that the current model of banking industry self-regulation has failed to shelter regional Australia from the damaging impacts of bank branch closures," the report said.
Regional Australia lost 798 branches in the five years to June 2023 with increased closures during the COVID-19 pandemic, according to Australian Prudential Regulation Authority figures.
Banks say branch closures are due to the rapid uptake of digital services and a steep decline in face-to-face transactions.
The major banks resisted proposed obligations to keep a certain number of regional branches open.
"You need to consider what you are trying to enshrine into Australia," NAB's then chief executive Ross McEwan told a hearing in Canberra in 2023.
"Because it sounds as though you're enshrining a world that would never change, when it is changing dramatically."
Australian Associated Press
